USD/JPY continues to push lower below 110 despite USD strength

USD/JPY erases Monday's gains as 110 continues to act as a strong resistance.

US Dollar Index turns positive above 94.

Wall Street points to a positive opening.

After closing the fourth straight day higher, the USD/JPY pair failed to extend its gains on Tuesday and retraced yesterday's upside. As of writing, the pair is trading at 109.70, around 10 pips above its daily low, and is down 0.1% on the day.

The pair's fall on Tuesday is difficult to explain with the greenback gathering strength against its other rivals and the market sentiment staying relatively neutral. Ahead of the Markit and ISM service sector PMI data, the DXY is sticking to modest gains at 94.10, where it's up 0.1% on the day. On the other hand, Wall Street is pointing to a higher opening with both the S&P 500 and the Dow Jones Industrial Average staying in the green in the pre-market trading.

Looking at the technical picture, we see that the 200-DMA is sitting where the 110 psychological level is located, and this formation may have triggered profit-taking and weighed on the pair. On the other hand, despite a lack of clear flight-to-safety, the 10-year US T-bond yield is down nearly 1% on the day, helping the pair make a downward correction.

Technical levels to consider

With a decisive break below 109.60 (daily low), the pair could edge lower toward 109 (psychological level/50-DMA) and 108.10 (May 29 low). On the upside, only a daily close above 110 (psychological level/200-DMA) could bring in more buyers and open the door to 110.50 (May 15 high) and 111.35 (May 21 high).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.